To most small businesses, competition is very scary term. Most would prefer to insulate their businesses from this evil and sail smoothly alone. What a wishful thinking! Like it or not, competition is something like air to business and no matter what business you are in and the size of your business, being competitive is the only safeguard that would ensure you will continue to be in business tomorrow.
So, how does a business is managed in order to be competitive?
First, an entrepreneur must accept that competition is a fact of business and he or she needs to put all necessary effort to attain competitiveness in the market the business is in. Acceptance is the key. Otherwise, the entreprenuer would continue operating by ignoring the key factor to sustain its business.
The second step is perhaps for the entrepreneur to figure out the value proposition it is offering to the market it is serving. This would require the "market" to be defined. If you are operating a burger stall by the road side, who are your intended customers? People living in the serrounding housing estates, students, office workers? By knowing the market, the business has to decide what would make it special to the people it intends to sell. Tasty food? Average food at low prices? Convenient? A combination of all these offerings? In figuring out the value proposition, one has to understand what the market wants and not just the business wants to sell. If the later is the case, effort in making the market to understand the value offered is critical.
The next step to deliver the product or services to the customers based on the value proposition that has been determined earlier. This is the complicated bit as it requires real performance. In the case of the burger stall, it has to be at the right location, the food must be tasty and clean, workers work fast enough based on the expectation of the customers and the price is both affordable to the customers and profitable to the business.
As in any other elements of life, the competitive factors keeps on changing and the entrepreneur has observe the changes in the market place to retain its competitiveness. For example, if business is good, a competitor may set up a similar business within the same vacinity. How do you respond to this? Lower prices? Offer new type of burgers? If your response is consistent with the value proposition that you offer, the chances of maintaining competitive edge is higher.
As described above, a business exist in a dynamic relationship with the market it serves. Therefore, an entrepreneur has to be clear of the value proposition it offers to the market as well as the competitors which may be focusing on the same space in the market. Understanding the dynamics and responsing fast enough to the changes in cirsumstances would provide a business a better chance of sustainability.